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Très mal…

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Nothing screams “It’s time to panic!” quite like a butter shortage in France. Oui oui. The country is in the throes of a shortage of the stuff that dreams and croissants are made of, primarily because the cost of the creamy spread has gone up and the supermarkets aren’t forking over the euros to pay for it. So how exactly does an entire country find itself in the midst of such a supply shortage? First, France has been dealing with some bad weather which has somehow affected the supply of cow feed. Don’t ask me the mechanics here because I have no idea. Then we get to New Zealand. Yes, New Zealand. Did you know that New Zealand is a leading butter producer? Neither did I. New Zealand, with its own issues, has been decreasing its exports of the stuff, which in turn has contributed to France’s shortage and price increases. However, the all-time proverbial buzz-killer/price-increaser is basically an overall global increase in demand for butter. When the whole world is eating more of the stuff, the price magically, and inconveniently goes up. In fact, butter went from $2,800 per ton in April 2016, to $8,000 per ton this past September. Crazy, right? And like Americans stockpiling batteries and water before major storms, the French have been stockpiling…butter. I dare you not to laugh. Out loud. In any case, if you don’t believe me, just check out Twitter for all sorts of French/butter humor. You won’t believe how many jokes this is churning out – sorry, had to do it.

Let’s get together…

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There are some things in life that are just meant to be. For instance, peanut butter and jelly, macaroni and cheese, and of course, beer and cannabis. Hence, Corona beer maker Constellation Brands just scooped up a 10%, $191 million-stake in Canopy Growth Corp, a Canadian company that makes cannabis and medical-marijuana products. As for Constellation Brands, a company valued at $42 billion, it now has the dubious distinction of becoming the very first major company that specializes in wine, beer, and spirits to invest in this budding – no pun intended – pseudo-legal industry. The fact is, the issue of legalizing marijuana seems to be on the table in the U.S. and Canada, and not just for medical use. But Constellation really isn’t planning on doing anything major with its stake. Just yet, anyway. It plans on maybe just starting to produce some cannabis-infused drinks. Interestingly enough, the more marijuana gets legalized, the less alcohol gets consumed. For Constellation Brands, it was a pre-emptive move, positioning itself at the forefront of the industry, enabling it to take advantage of the all the opportunities that await once legalization, on the federal level, is securely in place. Nice little fun-fact: Canopy Growth Corp’s ticker symbol, which trades on the Toronto Stock Exchange is…wait for it…WEED. Catchy, huh?

You “auto” know…

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U.S. consumer spending went up quite impressively last month – a whopping 1% (yes, that is whopping) – in large part because of the auto industry. That’s especially important since consumer spending accounts for 2/3 of the U.S. economic output. And who doesn’t love strong economic output, right? Yes, spending rose a lot, the most since August 2009, because there seemed to be a major increase in consumers buying cars. Sadly, that surge in car-buying was helped by the two recent major storms that ravaged a large swath of the United States and effectively destroyed a ton of vehicles. Incidentally, August 2009’s rise in spending was also attributed to the auto industry. At the time the government put out a program called “cash for clunkers” that fueled its own surge in pending. Along with that nifty bump in consumer spending came a 0.4% increase in personal income. And bonus: wages increased by the same amount.

Sudsy…

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A frothy beer merger seems to be brewing for two of the biggest beer makers in the world. Rumor has it that ABInBev and SABMiller are throwing around the idea of possibly joining foamy forces to create the biggest beer company. Ever. The move could also result in forming one of the biggest food and beverage companies. Ever. If the merger goes through, the new company would control a mind-numbing half of the entire beer market’s total profits. The new entity will also become one of the top ten biggest companies in the world, with Procter & Gamble and Nestle SA trailing behind. How a beer company’s market cap could surpass that of companies which make toothpaste and chocolate is beyond me. But I digress. ABInBev owns a lot beers you know like perennial classics, Budweiser, Corona and Stella Artois. But it also owns a lot that you may not have heard of like Antarctica, which is brewed…wait for it…in Brazil. Together with the malodorous Cass beer from South Korea, AbInBev owns over 40 different brews from all over the world. However it’s the market in Africa that has eluded this beer behemoth all this time. Hence, it’s looking to expand with SABMiller who already has quite the handle on that continent. Even though this is still all just talk, news of the potential merger sent shares of SABMiller up 23%.

On a high note…

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There’s nothing like a good old-fashioned accounting error to generate marijuana sales. Because of a glitch in Colorado State Tax laws an automatic suspension of new taxes was conveniently triggered. The marijuana tax was the lucky winner and was met with great enthusiasm by the state’s marijuana users who regularly shell out an extra 25% in taxes for the stuff. It all started because Colorado under-estimated tax collection from last year. When that happens…poof…25% in sales and excise taxes magically disappears for one special day. Today being that day. Mason Tvert, director of communications for the Marijuana Policy Project said, “It’s crazy how much revenue our state used to flush down the drain by forcing marijuana sales into the underground market…It’s even crazier that so many states are still doing it…” Amen. Also interesting to note (well, to me anyway) is that sales of marijuana outpaced those of alcohol and tobacco. With marijuana raking in tax revenues of $70 million, alcohol only managed to eke out a paltry $42 million in tax revenue. Marijuana users spend approximately $1,800 a year on the stuff while consumers spend $450 on alcohol and just $315 a year on tobacco.

On a low note…

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Just when you think things are starting to look fiscally up, the U.S. Census Bureau steps in to to ruin the day. The bad news is that the median household income has been going down. As in, not up. In 2013, median income in the United States was $54,462. That number should have gotten bigger. But alas, 2014 brought with it a median income of $53,657. Which makes no sense since the economy seems to be recovering and employment is hovering at seven year lows (even though wages haven’t been picking up any speed). If that’s not bad enough, the poverty rate has also gone up from 14.5% in 2013 to 14.8% in 2014. Apparently, the poverty rate and the median income are not considered statistically significant, at least according to the Census Bureau researchers who presumably, make more than $53,657 a year. Just saying. And because it wouldn’t be any fun not to inject some politics into this discussion, the Democrats are rejoicing since the number of people roaming the streets without health insurance fell from 42 million people to 33 million. In an attempt to sap their mojo, however, Republican Paul Ryan, who chairs the House of Representatives Ways and Means Committee, advised Dems not to pat themselves on the back just yet, since clearly their efforts to fight poverty aren’t working.

Nothing to get all tweeted up about…

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It’s the big news that wasn’t. A story about a $31 billion Twitter buyout made its way online on a website that looked suspiciously like it came straight out of Bloomberg headquarters. Except that it didn’t. A Bloomberg spokesperson said that the story was “fake and appeared on a bogus website that was not affiliated with Bloomberg.”In fact, the website was created just a few days ago, was rife with typos and referred to Twitter’s former CEO Dick Costolo as “Richard ‘Dick’ Costello.” Talk about rookie mistakes. It’s too bad the story was false as the news caused shares of Twitter to spike more than 8%. I guess this means Wall Street digs the idea of a Twitter buyout. It’s not the first time a bogus story caused a stock to artificially inflate. Avon Products had a similar situation months back when a company calling itself PTG Capital Partners filed a bid to buy the company for $8 billion. Now, Avon’s great and all but that price seemed a bit too high for a company that hadn’t had a good quarter in too long of a time. This, of course, raised some red flags and now the perp behind the phony filing is facing the legal wrath of the SEC.

High-er education…

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Ever since Colorado decided to legalize recreational marijuana, schools in the Rocky Mountain State have been emerging victorious. A special fund from marijuana sales, set aside for Colorado schools, has been setting records thanks to a 15% excise tax. In 2014, $13.3 million in pot taxes for school construction was raised. But in just the first five months of 2015, that fund already surpassed $13.7 million. Part of the reason for the huge price increase is because marijuana businesses received a one time tax exempt transfer of medical plants. But it also helps that there are three different taxes imposed on marijuana, including a 2.9% sales tax, a 10% special marijuana sales tax and a 15% excise tax on wholesale marijuana transfers. Unfortunately, pot still has its haters and those opponents are coming out in full force using a racketeering law – that was initially established to bring down organized crime – by suing not just pot businesses, but their banks, their bond companies and even their accountants. Now if only there was a way for marijuana businesses to sue the pot opponents and level the playing field.

June gloom…

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Well it looks like the Fed won’t be rushing to hike rates anytime soon all thanks to the Commerce Department’s latest report for June. In case you missed it, consumer retail sales were pretty depressing. The numbers were weak and that is a problem since consumer spending accounts for 70% of the economy, suggesting that the economy isn’t growing as it should. Sales of automobiles and other goods took quite the hit as would-be spenders are playing it cautiously about spending their hard-earned cash lest they need it for a rainy day. The fiscal crisis of 2008 is still managing to spook a lot of people even though hiring is pretty decent and the labor market is fairly healthy. To be fair, though, wages are kind of flat and everyone would appreciate a little rise on that front. Even the revised growth rate for May was disappointing coming in at 1.0% as opposed to the 1.2% that was first reported. Here’s hoping July brings better fiscal news.

Fat cats…

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Good news, that is, if you work on Wall Street. According to new data from New York State Comptroller Thomas DiNapoli, bonuses are up 3% in broker-dealer firms. Those bonuses managed to increase even though profits at most Wall Street firms took major hits. Together, all those lucky bonus takers took home (or are expected to take home) a very grand total of $28.5 billion, with the average earner scoring $172,860. They might have even taken home more but all those legal settlements stemming from the firms’ pernicious little roles in the 2008 fiscal crisis managed to put a crimp in profits. The securities industry also added 2,300 jobs, presumably ones that come with bonuses too. Has your jaw hit the floor yet? Even all those pesky new regulatory changes couldn’t stop those bonuses from rising. So why exactly might this information make the New York State comptroller so giddy? Because Wall Street accounts for 19% of New York State’s revenue and when the tide is high, all boats rise.

Speaking of bonuses…

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The amount of money that keeps pouring into Colorado’s state budget from marijuana sales just keeps getting…higher. No matter how you feel about legalizing recreational marijuana, there’s no denying its fiscal benefits. Sales of cannabis have helped the state rake in close to $9 million…just in the month of January. That was a whopping 163% increase over January of 2014. First, there is a a fee imposed on businesses that sell marijuana. All those businesses paid about $1 million in fees just for the privilege of selling the stuff. In sales tax receipts alone the state took in $3.5 million on a 10% sales tax for recreational pot. Colorado also puts a 15% excise tax on the stuff with funds from that going toward school improvement projects. There is a joke in there somewhere but I’ll stay away from it.

Just not that into you…

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Handbag and accessories maker Vera Bradley took a nasty 16% hit on its stock today as it announced its abysmal fourth quarter earnings. Revenue fell 3% from a year ago to $157 million. But its that 13% drop in its net income, falling to $17.3 million, that is leaving a nasty mark. Blaming it on the fact that Vera Bradley can’t seem to attract new customers, CEO Robert Wallstrom said “overall business trends remain difficult.” Well, for Vera Bradley, anyway. Not only is the company closing up shop on its New Haven, Indiana plant where 250 people will be left without a job, but Vera Bradley will now take the necessarily evil step of manufacturing its products overseas, since it’s apparently 90% cheaper to do so. The company, started in 1982, went public in 2010 at $16 a share. After hitting a high of close to $50, back in 2011, the stock has been taking a vicious little dive, hitting all-time lows. All this comes two weeks after Vera Bradley named Olympic gold medalist Meryl Davis as its celebrity ambassador.

Gone to pot…

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It just keeps getting better and better for Marijuana. Privateer Holdings, a private equity firm whose focus happens to be on the cannabis industry, just got a major cash infusion from a venture capital firm. But this is not just any venture capital firm, either. The one and only Peter Thiel, billionaire, and partner at venture capital firm, Founders Fund, just handed Brendan Kennedy, CEO and co-founder of Privateer Holdings millions upon millions of dollars to be a part of the cannabis magic. Privateer Holdings, if you recall (and it’s okay if you don’t) scored a huge 30 year licensing deal with the family of Bob Marley to manufacture Jamaican cannabis strains and hemp-infused products for the Marley Natural brand. It’s an epic move by Founders Fund, and an even better one for Privateer Holdings because it marks the first time a major institutional investor invests in the marijuana industry. Recognizing that this is a relatively new industry with countless untapped resources and opportunities, and marijuana legalization occurring in 23 states and counting, Founders Funds figures its a great strategic move. I suspect Founders Fund knows what they’re doing seeing as how it invested in a few other companies you might have heard about including Facebook, Airbnb and SpaceX.

Mortgage sweet mortgage…

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Not that it’s polite to rejoice at the expense of our overseas friends and their fiscal shortcomings – a veritable global schadenfraude – but their fickle unreliable little Euro and falling oil prices are doing wonders for our mortgage rates over here. Indeed, mortgage rates are dropping because other parts of the world are experiencing economic issues, and those issues are making investors eager to cozy up to the relative warmth and fuzziness of US government bonds. When investors start cozying up to these bonds, mortgage rates keep falling and falling and…In any case, if you’re looking to take out a mortgage, this week you can get one at a rate of 3.73% on a 30 year fixed. That’s not only down from 3.87% the week before but it’s the lowest rate it’s been in over a year and a half. Looking for a 15 year instead? How does 3.05% sound. That figure is also down from last week’s 3.15%. Clearly a lot of potential homebuyer’s are getting the memo on these falling mortgage rates as loan applications were up by 11% last week.

Can’t you take a hint?

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In a not so subtle hint, Starboard Value Chief Jeff Smith told Yahoo CEO Marissa Mayer in a letter that, “Should you instead choose to proceed down a different path … such actions would be a clear indication to us that significant leadership change is required at Yahoo.” The path to which Mr. Smith is referring is if Ms. Mayer decides to pick up CNN or another cable outlet instead of taking his suggestion of merging with AOL for the benefit of the “cost synergies” this merger would bring. By the way, Starboard owns 7.7 million shares of Yahoo. Also, by the way, Starboard owns shares of AOL, as well. Lastly, by the way, Starboard famously (notoriously?) chucked the board of Darden Restaurents, of Olive Garden fame, last year.

Toke on this…

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He’s been gone a long time, smoking a big fat joint in the sky, but Reggae icon Bob Marley still managed to score a worldwide exclusive, 30 year licensing deal for the “world’s first cannabis brand” appropriately dubbed Marley Natural. With the help of a Seattle-based, cannabis-focused (how industrious!) venture capital firm, Privateer Holdings, Marley Natural will feature strains of heirloom Jamaican cannabis. Kind of like heirloom tomatoes, except I’d never put tomatoes into a batch of brownies. But it won’t just be cannabis that you can purchase under the Marley Natural brand. The brand will also be putting out other useful stuff like lotions and containers (in which to store your cannabis to optimize freshess). No doubt those items will certainly make nice gifts (but again, you can’t smoke ’em). And bonus: the products will even have a “strong social conscience.” Expect to see the cannabis and other products in places where Federal law allows this sort of thing.

Up up and away…

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The joys of dropping oil prices will only carry you so far – by car anyways. Because even though airlines saved over a billion dollars in fuel costs last year, they seem to be pretending that they didn’t get the memo about dropping airfares prices. And why should they? After all, we’re still booking tickets at the prices the airlines set. Those prices are coming in at an average of over $370 per ticket, which by the way, does not include fees and taxes. Planes are still full – and often oversold. Airlines are posting great profits and would much prefer to order new planes and give their terminals face-lifts than pass those fiscal delights onto the very contingent that brought about those profits in the first place.

Time to move to the suburbs?

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Urban Outfitters is not looking as hip and cool as it used to be, at least according to its third quarter earnings. Sure the company posted growth, but mainly from its Anthropologie and Free People brands – not from its namesake. Which I suppose stings a bit in the portfolio. While the company beat its sales estimates by $1 million, coming in at $814 million, it was its earnings that provided the fiscal bummer. The company earned just over $47 million and $0.35 per share which might seem solid, but really Wall Street expected earnings of $0.41 per share. What made those earnings that much more fashion-backward was the fact that the same time a year ago the company pulled in $70 million and $0.47 per share. Some were wondering if maybe the company’s disappointing earnings had more than a little to do with some of its more offensive merchandising offerings, like the blood-spattered Kent State sweatshirt or the women’s “Eat Less” t-shirt. Even though the items were eventually pulled from the shelves, it still begs the question if they left an un-hip impression on the very consumers it tends to attract.

On a high note…

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A big shout out goes to Washington today as it becomes the second state to legalize selling and using recreational marijuana. Medical use of the buzz-inducing plant has already been legal there for quite some time. While you might wonder if Washington is doing this out of the kindness of its heart or to increase revenue of the snacking industry, you might also consider the $200 million in taxes and fees related to marijuana that the state expects to rake in over the next four years. “I think they’ve got a good handle on what they’re doing,” says Andrew Freedman, Colorado’s Director of Marijuana Coordination. I wonder what he listed as skills and relevant experience on his resume. Colorado, which had the financial prescience to legalize marijuana much earlier this year, has already generated tens of millions of dollars for the state. Tourists and residents of Washington can expect some shortages and unusually high – no pun intended (well maybe just a little) – prices until the state can work out the supply and demand kinks of the newly legalized substance but it should be worth it as experts say that legalization leads to better pot potency.

Uber Vs. New York Cabbies…

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Uber made a big in your face decision to temporarily reduce prices on its Uber X service in New York City. The app, which is still fighting numerous regulatory hurdles in numerous cities, wants to take a big bite out of the Big Apple’s market share. Uber’s alleged logic is that even in a city where hailing a cab is easier than looking at your smartphone, if it can lure customers away with cheaper fares, than those customers will just get used to using the app, even if and when those fares go back up. And in case you were wondering, yes, the folks behind Uber are probably taking a huge hit by dropping its prices by 20%. But the company figures that’s what it takes to compete against the already reasonably priced NYC taxis. No doubt that $1.2 billion in funding it just received probably softens the blow. That and the fact that the company is currently valued at $17 billion.

Buybuy shares…

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Bed Bath & Beyond announced plans to buy back $2 billion in shares over the next fiscal year. Perhaps all those coupons I regularly use are responsible for the the company’s stock slump. But the board seems to think (and hopes) a buyback will help alleviate that and cause shares to go back up. The board clearly feels confident about the company and its long term growth and potential. Sounds like a middle school report card. The company, which also owns Buy Buy Baby and Cost Plus World Market, and has about 1500 stores, has seen its stock tank this year by around 26%. It wouldn’t be right if some of that blame wasn’t attributed to bad weather. But culprits, like Amazon and other e-commerce sites have been giving the chain some fierce competition as well. And even though the company did post a profit this quarter, it was still down 8% over last year’s gains.